If you are a property owner in Malaysia, you may have heard the term ‘operating expenses’ before. But what exactly are operating expenses, and how do they affect your rental income? In this article, we’ll explore what rental operating expenses are, how they vary, and more.
After reading, you will be well-equipped to navigate the Malaysian rental market and make informed decisions to maximise your investment returns.
What are Rental Operating Expenses in Malaysia?
Rental operating expenses in Malaysia refer to the costs associated with managing and maintaining a rental property. As a landlord, it is crucial to have a clear understanding of your operating expenses, as they have a significant impact on your rental income.
If your expenses are high, you may find it challenging to generate a profit from your rental property. Conversely, if your expenses are low, you will have a greater portion of your rental income to spend on yourself after covering the costs.
4 Common Operating Expenses Landlords Should Know
While rental operating expenses can vary depending on the type and location of the property, there are several expenses that most properties share. They include:
1. Property Taxes
In Malaysia, all rental properties are subject to property taxes. The amount of property tax a landlord must pay is based on the property’s assessed value. It is important to note that property taxes are an annual expense and must be paid regardless of whether the property is occupied or not.
Generally, the utilities for rental property include gas, electricity, and water. The terms of these responsibilities should be explicitly outlined in the lease agreement between landlords and their tenants.
3. Maintenance & Repairs
It is the landlord’s responsibility to ensure that all necessary maintenance and repairs are completed promptly and effectively to ensure the safety and comfort of tenants. Maintenance tasks can range from simple tasks, such as changing light bulbs or fixing leaky faucets, to more complex tasks, like repairing plumbing or electrical systems.
4. Property Management Fees
Hiring a property management company is beneficial for landlords who prefer to have a professional handle the day-to-day operations of their rental properties.
These companies provide a variety of services, including tenant screening, rent collection, property maintenance, and handling tenant disputes. However, this service comes at a cost, and landlords will need to pay a fee for the company’s services.
3 Effective Ways to Reduce Your Operating Expenses
1. Perform Regular Maintenance
By performing routine maintenance tasks, landlords can identify and address minor issues before they become significant, more expensive problems. Additionally, regular maintenance can help prolong the life of a property’s major systems and components, ultimately reducing the need for costly replacements.
2. Invest In Energy-Efficient Appliances
Energy-efficient appliances may require a higher initial cost, but they can save you money on utilities over time. This is because energy-efficient appliances, such as refrigerators, dishwashers and washing machines, use lesser energy, reducing the property’s utility bills.
3. Negotiate with Vendors
When hiring vendors for maintenance and repairs, finding reliable professionals who can get the job done quickly and efficiently is crucial. However, it’s also important to keep costs under control. One way to do this is by negotiating for better rates with vendors.
Landlords who provide repeat business to vendors may get discounts or better service rates. This can reduce operating expenses over time and increase the rental property’s profitability.
Manage Your Rental Property with Rumah-i
If you are a landlord in Malaysia, managing your property’s operating expenses can be a challenging and time-consuming task. However, with the help of Rumah-i, you can leave the hassle of property management to the experts.
From tenant screening and home makeovers to property management and maintenance, we have the expertise and experience to handle it all.